By: Ian Johnson
In the spring issue of The Stand, NSGEU Pensions and Benefits Officer Corinne Carey told us that a five-year funding review was coming for the Public Service Superannuation Plan (PSSP) by June of 2015. As one of the three NSGEU reps on the Board, I am writing to tell you that this review was conducted as planned.
This was the first such review which is required under the provisions of the Public Service Superannuation Act (or PSSA). This Act was changed substantially in 2010 and 2012 to include a number of important changes such as a funding policy.
The purpose of this review is to determine the capacity of the Plan to afford annual cost-of-living adjustments (or COLA) for the next five years from January 1, 2016 to December 31, 2020. For the last five years from January 1, 2011 to December 31, 2015, an annual cost-of-living adjustment of 1.25% was guaranteed.
Since the Plan was 104.7 per cent funded as of December 31, 2014 on a market value basis, the funding policy in the Act states that if the funded ratio of the Plan is between 100 and 110 per cent, a COLA may be provided as long as the Plan is not projected to fall below 100 per cent at the end of the five-year cycle, including the impact of granting COLA throughout the five-year cycle. There is also a sliding scale which determines the amount of the funding surplus to be allocated to the fund known as the strategic reserve.
As a result, the Trustee (that is, the joint Board) decided in June to do the following:
Allocate $125 million of the funding surplus to the strategic reserve.
Approve a cost-of-living adjustment of 0.85 per cent for each of the next five years, that is, from 2016 to 2020.
Confirm there would be no changes to the contribution rates of Plan members and employers for the next five years.
The Trustee’s next review of the Plan’s funded health will be in 2020. This will be for the next five-year cycle from January 1, 2021 to December 31, 2025. Whether or not COLA will be provided will depend upon the Plan’s funded ratio as of December 31, 2019. Under the Act, COLA may only be provided if the Plan is fully funded (that is, at 100 per cent or more), and if determined to be prudent by the Trustee.
For more information on the five-year review, please go to: http://www.novascotiapension.ca/publicserviceplan/news/5yearpssphealthreview . The latest Annual Report for the Plan, that is, for 2014-15 can be found at:
Servicing Coordinator/Policy Analyst